Oil prices recovered around 2 percent on Friday but concerns persist as output in the USA and in the OPEC member countries remains high while global growth in 2016 may be lower than previously assumed. On Thursday (07/01) the World Bank cut global GDP growth in 2016 to 2.9 percent (y/y) in its the January 2016 Global Economic Prospects from a growth forecast of 3.3 percent (y/y) in the June edition (last year the world economy expanded 2.4 percent y/y).

In the 2016 State Budget the Indonesian government targets an oil production rate of 830,040 barrels per day (bpd), up from last year's target of 825,000 bpd. However, according to a report of Indonesia's Finance Ministry the nation's oil output only reached 779,000 bpd last year. This poor performance was blamed on low global oil prices and on disruptions at the Cepu block (part of the Banyu Urip field) in East Java. Mobil Cepu Ltd, a subsidiary of Exxon Mobil Corporation and contractor for the Cepu block, only managed to produce 46,089 bpd last year or 61 percent of its 2015 target. This year the company targets a production rate of 168,430 bpd.

Read Analysis: Overview of Indonesia's Oil Sector

Indonesia's Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), the country's upstream oil and gas regulator, is optimistic that Mobil Cepu Ltd can reach its production peak in March 2016. However, analysts expect to see more obstacles for the company in 2016 as it still does not have all necessary licenses, while the low oil prices do not make oil producers keen on producing much oil in the near-term.

Crude Oil Price:

Production Target per Oil & Gas Contractor in 2016:

Oil & Gas Contractor
Working Area
2016 State Budget
Chevron Pacific Indonesia Rokan         247,950
Mobil Cepu Ltd Cepu         161,120
Pertamina EP Indonesia         104,420
Total E&P Indonesia Mahakam          55,740
PHE ONWJ Ltd ONWJ          40,520
CNOOC S.E.S Ltd S.E. Sumatra          30,760
ConocoPhillips Indonesia Inc Ltd South Natuna Sea Block B          17,050
Petronas Carigali Ketapang Ketapang          19,140
Chevron Indonesia Company East Kalimantan          17,590
PetroChina International Jabung Ltd Jabung          12,600
Virginia Indonesia Company (VICO) Sanga-Sanga          10,500
BOB - BSP Pertamina Hulu CPP          11,420
PHE WMO West Madura          12,270
Sub Total 13 Largest Contractors         741,080
Remaining 70 contractors          88,960
Total Oil Lifting Indonesia         830.040

Source: SKK Migas